System under which a licence is granted to manufacture or market a product or service for which the equipment or supplies are manufactured and furnished by the franchisor. The franchisee makes an initial payment and/or pays a royalty on the product or service to the franchisor. Franchises are often granted for a particular territory and for a particular period. The franchisor usually performs certain managerial functions and assumes specific investment and operating costs, while the franchisee operates for his own account.